“My philosophy is to treat shareholders money like my bank account”
How should a mining company run it's business? In this interview Patrick Soares explains why he's joined Foran Mining, why he's excited about copper and zinc, and why you should catch him at Mines and Money London
Patrick Soares, President & CEO, Foran Mining
Andrew Thake, Mines and Money
Foran Mining Corporation is a Canadian exploration and development company listed on the TSX Venture Exchange and headquartered in Vancouver, Canada.
Foran Mining is focused on zinc and copper resource development in the Hanson Lake VMS Camp in east-central Saskatchewan, in an area of excellent infrastructure, an hour’s drive from the world class Flin Flon Mining Camp. The Hanson Lake Camp is an emerging zinc-copper base metal district similar to nearby Flin Flon and Snow Lake. The formation of clusters of massive sulphide deposits is a common characteristic of VMS belts worldwide, which make them attractive target areas for exploration and development.
Patrick Soares was appointed President and CEO of Foran Mining Corporation and a member of the Board of Directors in November 2010. Previously, Mr. Soares served as the President and CEO of Brett Resources Inc., which was acquired by Osisko Mining Corp. in May 2010.
Mines and Money (MM): How did the current Foran Mining come into existence?
Patrick Soares (PS): Foran Mining was founded in the late 1990s by a group of people looking to develop zinc and copper assets. In 1991 Foran Mining acquired McIlvenna Bay from Cameco as they were looking to focus their mining operations exclusively on uranium.
Foran Mining advanced the McIlvenna Bay project until the mid 2000s when the companyentered a dormant period. The company was quiet for a number of years until 2010 when Darren Morcombe, Foran’s current Chairman, persuaded the largest shareholder that he could put together a new management team that would add value to shareholders.
Foran’s focus is the Hanson Lake VMS Camp in east-central Saskatchewan, Canada. Our flagship property is still the McIlvenna Bay deposit, where a positive Preliminary Economic Assessment was completed in November 2014.
MM: What attracted you to join Foran Mining?
PS: Previously I’d worked for Brett Resources until they were taken over by Osisko Mining in 2010. I was attracted to Foran Mining as I saw McIlvenna Bay as an undervalued opportunity. I could repeat the success I had at Brett of taking the Project to PEA, Feasibility and then to development and production. We successfully doubled the size of the existing zinc deposit by adding a copper component, on the way to completing a PEA. We are now in the midst of undertaking work programs to support a feasibility study on the deposit. McIlvenna Bay has all the elements for success. As global demand for zinc and copper continues to increase, projects in jurisdictions such as Saskatchewan, that understand the importance of mining, managed by keen professionals committed to progress, and growing responsibly and safely, are positioned for success.
MM: What other projects does Foran Mining have in its’ portfolio?
PS: Whilst we have been developing McIlvenna Bay, we’ve also been progressing with exploration on other targets.
Apart from McIlvenna Bay, the Hanson Lake Camp includes the Bigstone deposit, as well as the recently discovered Thunder Zone. Exploration we’ve carried out so far on the Thunder Zone , indicates it is hosted by a 12 metre thick massive sulphide. At Bigstone, one of our best holes intersected some 105 metres of 2.0 percent copper.
This two-legged approach to exploration and development is setting us on a road to success. We have a good team to push it through to production.
MM: How did you deal with the 2014/2015 when markets were tough?
PS: Markets were tough. Rather than dilute our shareholders, we took a different approach. We decided to seek a strategic investor for McIlvenna Bay while waiting for the market to improve. It was during this time that we engaged in early discussions with Glencore..
MM: How have the last 12 months been for you?
Excellent. We struck an agreement with Glencore where they have agreed to do the feasibility engineering work in return for an offtake agreement on McIlvenna Bay. The Technical Services Agreement with Glencore means that Glencore will provide professional and technical services, assistance, guidance, and advice in connection with the objective of completing a Feasibility Study on Foran’s McIlvenna Bay Project in mid-2019.
This agreement has helped us raise C$14 million dollars. We have focused our expenditures on infill drilling McIlvenna Bay and work programs necessary for the feasibility study. We have had four drills running since the beginning of the year. Some of the money raised is also earmarked for further exploration on Thunder Zone and as well as Bigstone. .
We’re long term believers in copper. There is a copper shortage, developing due to its pivotal role in the electric vehicle revolution. We also believe zinc is going to be in a deficit position in the near future.
Glencore’s backing is clear evidence that they believe the Project has a good chance of becoming economically feasible and going into production. Our PEA estimated that the cost of getting McIlvenna Bay to production will be C$250 million but we think we can lower costs further. For example, we might be able to reduce capital costs by using a zinc concentrator located in Flin Flon that should have spare capacity by the time we go into production. MM: What sets your mining company apart from others in the space?
Firstly, we have a focus on rewarding our shareholders. At Foran Mining, management puts its money where its mouth is. We invest in our own Company in public financings. Darren Morcombe has purchased 12 million shares of Foran; I own over 4 million shares; Pierre Lassonde a big investor in the Company and Chairman of Franco Nevada, has also come in at each round of investment.
The advantage of having shareholders like Pierre, Darren and myself is that we are patient mining executives who know that in order to be successful we must take a logical step by step approach to progressing the asset. Having someone like Pierre Lassonde as one of our major shareholders is fantastic. Pierre helps to open doors to many investors and companies. Not many other juniors can boast the same quality of shareholders apart from some of the Lundin and Ross Beaty owned vehicles.
My philosophy is to treat shareholders money like my bank account. As soon as we get money in, we invest it back into the ground.
Secondly, we are operating in the Saskatchewan Flin Flon district, one of the world’s most friendly jurisdictions, which mitigates risk on that area.
MM: What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?
PS: We have to be sensitive to copper and zinc prices. However, we are in the advantageous position of operating in Canada but selling in US$ dollars. Canada is a resource rich country. Often, when resource prices drop worldwide, the lower prices are cushioned by a falling Canadian dollar. The net difference to Canadian companies can sometimes be beneficial.
MM: What do you think the industry needs to do to improve its reputation?
PS: The industry needs to create more shareholder value and strive to create more NPV per share. We are in a tough business and people need to be aware that it takes 10 to 12 years to build a mine.
There are challenges to our business. Many investors are being drawn to cannabis and blockchain. However, I think too often the industry uses it as an excuse for their own poor performance.
The industry seems split into two very distinct groups. The majors have just only finished cleaning up their balance sheets, whilst the exploration companies are bearing the brunt of the risk.
MM: What do you think of the proposed Randgold / Barrick merger?
PS: From Barrick’s perspective it signals the end of their heavy debt situation. For Randgold, they are probably the best managed gold company and a great example of doing what you say you are going to do.
MM: What is your rationale for attending Mines and Money?
PS: We’ve attended Mines and Money on and off for a number of years. We’ve always ended up with gaining business from at least one primary investor who we have never met before.
MM: What is the book that has greatly influenced your life?
PS: The Alchemist by Paulo Coelho. It’s a short story where the central character is trying to find his own destiny. I like the humility the central character, and how he sees both a need and an opportunity to improve his life and the life of others.
MM: Which role model has inspired you the most in your career?
PS: I had the good fortune to work for good management teams at juniors. People like Ralph Bullis, Mike Kenyon and Dave Hall. However, the current team is the best that I have worked with.